Strong Drug Development Momentum Lifted Insmed Incorporated (INSM) in Q2

Baron Funds, an investment management company, released its “Baron Health Care Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund declined 5.06% (Institutional Shares) in the quarter, against a challenging backdrop for the broader Health Care sector, compared to a 6.19% decline for the Russell 3000 Health Care Index (benchmark) and a 10.99% gain for the Russell 3000 Index (the Index). In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, Baron Health Care Fund highlighted stocks such as Insmed Incorporated (NASDAQ:INSM). Insmed Incorporated (NASDAQ:INSM) is a biopharmaceutical company that develops therapeutic products for patients with serious and rare diseases. The one-month return of Insmed Incorporated (NASDAQ:INSM) was 7.55%, and its shares gained 39.63% of their value over the last 52 weeks.  On July 30, 2025, Insmed Incorporated (NASDAQ:INSM) stock closed at $105.18 per share, with a market capitalization of $19.979 billion.

Baron Health Care Fund stated the following regarding Insmed Incorporated (NASDAQ:INSM) in its second quarter 2025 investor letter:

“Insmed Incorporated (NASDAQ:INSM) is a biotechnology company with three lead pulmonology drugs that collectively have the potential to generate more than $8 billion in peak sales. We are particularly excited about TPIP, a once-daily prostanoid in development for PAH and PH associated with interstitial lung disease. Prostacyclin therapies are a mainstay for these conditions and currently generate about $4.5 billion in global sales. We believe TPIP could become the most effective option in the class, with significantly more convenient dosing. Shares rose after Phase 2 data for TPIP in PAH exceeded investor expectations. We are also positive on brensocatib for non-cystic fibrosis bronchiectasis, which is a $5 billion-plus opportunity. Physician feedback and survey data suggests the drug could be transformative, showing a 20% reduction in pulmonary exacerbations and improved lung function. We believe the disease is widely underdiagnosed (often misdiagnosed as asthma or chronic obstructive pulmonary disease) and could affect up to 500,000 patients in the U.S.”

Insmed (INSM) Soars After Raising $650 million

A biopharmaceutical research team taking notes in front of a laboratory’s microscope.

Insmed Incorporated (NASDAQ:INSM) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 64 hedge fund portfolios held Insmed Incorporated (NASDAQ:INSM) at the end of the first quarter, which was 72 in the previous quarter. While we acknowledge the risk and potential of Insmed Incorporated (NASDAQ:INSM) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than INSMED INCORPORATED (NASDAQ:INSM) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Insmed Incorporated (NASDAQ:INSM) and shared the stocks with huge catalysts on the horizon. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.